Tanzania, China sign East Africa investment deals worth $1.7 billion

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DAR ES SALAAM (Reuters) - Tanzania and China have signed investment deals worth more than $1.7 billion, including one to build a satellite city to ease congestion in the commercial capital Dar es Salaam - deepening Beijing’s ties with East Africa.

Tanzania's President Jakaya Kikwete (L) shakes hands with Chinese President Xi Jinping during a signing ceremony at the Great Hall of the People in Beijing October 24, 2014. REUTERS/Takaki Yajima/Pool

The money will be used to develop infrastructure, power distribution and business cooperation, Tanzanian President Jakaya Kikwete said in a statement on Friday, a day after the deals were formally signed in Beijing.

Tanzania later announced a $85 million in grants and zero-interest loans from China. It did not say what the money would be used for.

The deals extend China’s growing economic presence in Tanzania, which has made major natural gas discoveries off its southern coast.

The satellite city, on the outskirts of Dar es Salaam, will be a self-contained urban zone equipped with water, electricity, roads, banks, schools and hospitals.

The project, as well as a $500 million financial centre that will also be built in Dar es Salaam, are joint projects by the China Railway Jianchang Engineering Company Ltd (CRJE) and Tanzania’s state-run National Housing Corporation.

Tanzania’s state-run power company, TANESCO, meanwhile signed a deal with China’s TBEA Hengyang Transformer Co. for a rural electrification project that Kikwete’s office said would be worth “millions of dollars”. It did not elaborate.

In recent years, Chinese companies have signed deals to build a rail network and a 532 km (330 mile) natural gas pipeline. Between July and September of this year, Chinese investments totalled $534 million, compared to $124 million during the same period last year.

China says it will “speed up the construction” of the Bagamoyo port, a new Indian Ocean project being built north of Dar es Salaam, and begin offshore oil and gas exploration off Tanzania, according to a statement issued by Kikwete’s office.

Speaking at an investment forum in Beijing this week, Kikwete said he hoped to boost Tanzania’s exports to the Asian powerhouse.

China’s exports to Tanzania, which totalled $1.099 billion from 2012 to 2013, were roughly double the $495.74 million worth of goods China imported from Tanzania, he said.